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The Simple Economics of Benefit Transfers

Author

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  • Mr. Dennis J. Snower

Abstract

The paper examines the employment and unemployment implications of permitting unemployed people to use part of their unemployment benefits to provide employment vouchers to the firms that hire them. This opportunity to transfer unemployment benefits into employment subsidies--“benefit transfers” for short--would help replace the unemployment trap by an incentive to work. The vouchers rise with people’s unemployment durations and with the amount of training provided. The policy would be costless to the government since the cost of the employment vouchers is set equal to the amount saved on unemployment benefits. It would not be inflationary since the long-term unemployed, on whom the vouchers are targeted, have little influence on wage setting.

Suggested Citation

  • Mr. Dennis J. Snower, 1995. "The Simple Economics of Benefit Transfers," IMF Working Papers 1995/005, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1995/005
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=1282
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    Citations

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    Cited by:

    1. Milan Vodopivec, 2004. "Income Support for the Unemployed : Issues and Options," World Bank Publications - Books, The World Bank Group, number 14922.
    2. Vodopivec, Milan & Raju, Dhushyanth, 2002. "Income support systems for the unemployed : issues and options," Social Protection Discussion Papers and Notes 25529, The World Bank.
    3. Vodopivec, Milan, 1995. "Unemployment insurance and duration of unemployment : evidence from Slovenia's transition," Policy Research Working Paper Series 1552, The World Bank.

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